Tuesday, 27 July 2010

I must say that Freedom of speech in Malaysia is encouraging and heartening but in the same light politicians, especially a self proclaimed economist like Johor born young DAP Tony Pua who has a degree in Philosophy, Politics and Economics from Oxford University thus being an Oxford old boy he should be more careful when he uses economic numbers to whack the BN Government though. First here is what Tony has to say:

KUALA LUMPUR, July 25 — A lack of confidence in Malaysia’s economy has driven foreign direct investment (FDI) to our neighbours, leaving the once-roaring “Asian tiger” to compete with Indochina countries, the DAP said today.The World Foreign Investment Report (WIR) 2010 released by the United Nations showed that FDI in Malaysia plunged 81 per cent last year, trailing behind countries like the Philippines, Vietnam, Thailand, Indonesia and Singapore.

“For the first time ever in history, Malaysia attracted less investment than the Philippines,” DAP national publicity secretary Tony Pua said in a statement today.Pua pointed out that Malaysia was the only Asean country to experience negative FDI flow in 2009.The Philippines attracted US$1.95 billion (RM6.24 billion) in FDI compared to Malaysia’s US$1.38 billion, while Singapore raked in the most — more than US$16 billion.

“Among Southeast Asian nations, we are now only attracting more FDI than Cambodia, Myanmar, Brunei, Laos and Timor-Leste,” added Pua.“What was previously unimaginable, that we may one day be compared to countries such as Cambodia and Myanmar, is now a real possibility,” said the Petaling Jaya Utara MP, pointing out that those countries had also attracted less than US$2 billion in FDIs last year.

Prime Minister Datuk Seri Najib Razak has been trying to lift Malaysia’s profile as a destination for foreign investment to help the country achieve an average gross domestic product (GDP) growth of at least six per cent per annum over the next five years.

But Malaysia’s FDI rates have fallen faster than other regional players like Singapore and China, and at the same time capital outflows have dampened private domestic investments.The Najib administration has also warned that the economy may slow down in the second half of the year due to external factors but have insisted that a six per cent growth was still achievable.Today, Pua also said that Malaysia had suffered the biggest decline of FDI in Southeast Asia from 2008 till 2009.

“The government cannot use the excuse of the (global financial) crisis as the reason for the precipitous drop in FDI as we have performed the worst compared to all other countries big and small in the region,” said Pua.Data revealed that Malaysia suffered a large 81.1 per cent drop in FDIs compared to far healthier figures in Thailand (30.4 per cent), Vietnam (44.1 per cent) and Indonesia (44.7 per cent).

However, Singapore, Brunei, Philippines and Myanmar still managed to register positive growth, said Pua.Pua, also DAP’s chief economist, pointed out that Malaysia was the sole Southeast Asian nation to have registered a net negative FDI flow last year.

Najib was criticised for stalling on the NEM.“Malaysia was the only country where our outflow of FDI amounting to US$8.04 billion is substantially greater than the FDI of US$1.38 billion received,” said Pua.

“Not only are foreign investors unwilling to invest in Malaysia, our own local investors as well as foreign investors who are already in the country have a total lack of confidence in the ability of our economy to generate an attractive return to their investments,” added Pua.

He pointed out that Malaysia’s net FDI flows have declined from US$2.56 billion in 2004 and US$1.09 billion (2005), to a net negative US$0.02 billion (2006), negative US$2.7 billion (2007) and negative US$7.67 billion in 2008.“Despite Datuk Seri Najib repeatedly insisting that the era where ‘the government knows best’ is over, his administration continues to crowd out private investments by directly awarding mega-projects to government-linked entities, such as the Sungai Buloh land to an Employee Provident Fund joint venture with the government, or the Sungai Besi airport redevelopment, to the 1 Malaysia Development Fund,” said Pua.

“Without these necessary and critical changes to the government’s economic policies, the Malaysian economy will only continue to drift away from the radar of both local and foreign investors,” he added.Pua went on to criticise Najib for not moving ahead with his New Economic Model, pointing out the prime minister had been forced to call it a “trial balloon” after a sour reaction from some Malay groups.

Do check the numbers Tony our FDI inflow for 2009 is USD6.48 billion substantially more than the USD1.38 billion you quoted from that Gwai lo's(WIR) report. Have more faith in our countrylah YB.

After Tony Pua's tirade against the BN Government based on such presumptious figures, Mr. Calvin Sankaran a constant critic of the DAP Guan Eng led Pulau Pinang Government, came out the next day to rebut young Tony Pua:FDI plunge: UNCTAD’s data for Malaysia is wrong — Calvin SankaranJULY 27 (MI)

The World Investment Report (WIR) 2010 issued by the United Nations Conference on Trade and Development (UNCTAD), which reported a very significant plunge in Malaysian’s FDI (Foreign Direct Investment) in 2009, has been a godsend to the leaders and supporters of Pakatan Rakyat.

The report has given them a much needed opportunity and breathing space to deflect the intense public attention away from the spate of major scandals and cases of gross mismanagement that plaguing in the states under the Pakatan rule.

Predictably these supporters and leaders had swooped upon this FDI issue like a gaggle of vultures and tried pin the blame squarely on the Federal government shoulders. Reading some of these over the top, irrational and alarmist comments, one would conclude that the county is heading for the Armageddon and has no hope whatsoever for the future.

Unsurprisingly, DAP’s “Economic Advisor” and Petaling Jaya Utara MP Tony Pua, has been on the forefront of this assault, launching salvoes of statements and colorful charts to buttress his charge that the investors had totally lost confidence in Malaysia.

However, even a cursory survey of Tony’s argument shows that his analyses and statements are, as usual, devoid of intellectual merit and betrays a lack an understanding of the issue.

While it is unrealistic to expect a politician to be impartial and objective in his analysis, unfortunately when one reads PJ Utara MP’s latest comments it is embarrassingly, glaringly and painfully clear that Tony knows very little about the local and global investment scenario.

First of all, had Tony followed the FDI trends, he would have taken cognizance of the fact that UNCTAD’s data on Malaysia’s FDI inflows are completely wrong. Further, had Tony done his homework, he would have surely discovered that the data provided by the UN agency simply does not make any logical sense.

I am not sure how did UNCTAD arrived at the FDI figure of US$1.38 billion (RM4.4 billion) but MIDA had months ago had published in its website that Malaysia procured FDI worth US$6.48 billion in 2009. In fact the states of Sabah and Sarawak alone had attracted more than US$1.38 billion worth of FDI each in 2009.

So it is rather puzzling and incomprehensible that an Oxford graduate in economics and self confessed expert could have overlooked such basic facts and committed such obvious and elementary error.

Based on the correct figure of US$6.48 billion, Malaysia has done extremely well compared to its regional peers. In fact, the FDI numbers seem to indicate that foreign investors’ confidence in Malaysia had sky-rocketed. This could be attributed to the various bold reforms and the steady and sure-footed economic and political stewardship of our PM, Dato Seri Najib Razak.

I had been travelling around Europe, Asia and the US in the last few months for business purposes for my company. During these trips, I had the opportunity to speak to a number of business leaders and investors informally and almost everyone I spoke with seemed to agree that Malaysia has made very significant progress economically and politically under PM Najib. This is a quantum leap and a sea change in perception compared to my previous trip in 2008 when the investors’ sentiments were pre-dominantly negative and bearish.

The second point that Tony Pua had pointed out was pertaining the outflow of FDI from Malaysia. I am unsure of the accuracy of this data by UNCTAD but I am again rather surprised that an economist such as Tony could not fathom the simple reasons behind this outflow which is apparent even to non-economist such as me.

Malaysian firms from industries such as finance and banking, telecom, infrastructure, airline, oil and gas, etc. have grown in the recent years to be regional and even global players and champions. They have expanded and established themselves beyond our borders and have been investing and acquiring companies overseas. As such there is an outflow of FDI for such purposes.

Mr Calvin Sankaran ended his post with this juicy paragraph:

However there is one key point I do agree with Tony, that is, in his assertion that a drop in FDI shows a complete loss of confidence in the government. As such I am sure Tony too would concur with me that the massive 80 per cent drop in FDI for DAP-run and Lim Guan Eng-led Penang is a testament that the investors have no confidence in CM Lim’s leadership or his policies.

After all that, I thought that in time YB Tony Pua will still make a good future leader among the breed of future young Malaysian Leaders with his easy going smile and friendly face unlike the "anti anything BN" face of the Lim father and son, he will be a welcome face of the DAP of the future(face only lah).

However being young and all that Tony Pua as a politician must choose his words and check his datas carefully that's all, otherwise, he will end up like the chap below many times over:

1 comment:

Anonymous
said...

Statistics can be confusing but UNCTAD's stats has been confirmed correct by MITI minister himself. But as Nazri says, the outflow and lack of inflow is due to transference of cash injections back to recession HQ countries, and transferring investments in countries with cheaper labour.

International Trade and Industry (Miti) Minister Datuk Seri Mustapa Mohamed, explaining that low-value-add and labour-intensive investments were headed where labour cost was cheaper because Malaysia no longer provided incentives for such investments.

He stressed that the ministry was not disputing the FDI data reported by Unctad, declaring the statistics “important” and “correct”. He said, however, that the figures alone did not constitute the whole picture.

Miti also said the sharp fall in FDI in 2009 was due to foreign companies not making additional investments in Malaysia. At the same time, these companies had repatriated profits made in Malaysia to their parent companies that were in the midst of a global recession. (Source: Mustapa: Miti taking proactive measures to attract FDIs, The Star, 29 July 2010)